any one having california 529 education plan? Since it does not have state deduction and also potentially affect future financial aid. I am thinking if it's a good idea to have this account. we have two children 10 and 3.

Search the forums. There are have been dozens of threads on this already. One point in favor of the CA 529 is that they have the absolute lowest cost equity index fund at 0.08% ER. I'm also a CA resident but I actually choose Fidelity's 529 plan; its Total Market Index Portfolio is only 0.11% ER. That allowed me to consolidate all my investments in one brokerage.

Others do the same with Vangaurd's Nevada 529 Plan for similar reasons; though the ER is double at 0.16% for the Aggressive Growth Portfolio.

I have a California 529 plan. ER are pretty low. Yes it sucks we don't get a state income tax deduction but no tax on the earnings is still a good benefit if you start saving early. We opened one right when my daughter was born. That's about 18 years of compounded growth. Yes it effects your potential financial aid but our plan is to retire a few years before our daughter starts college. Income is counted much more highly in the financial aid calculation than assets so hopefully she might still get some financial aid. But if not we are prepared to pay for all expenses from the 529 and any difference we could cash flow or take from taxable as well.

I have a California 529 plan. ER are pretty low. Yes it sucks we don't get a state income tax deduction but no tax on the earnings is still a good benefit if you start saving early. We opened one right when my daughter was born. That's about 18 years of compounded growth. Yes it effects your potential financial aid but our plan is to retire a few years before our daughter starts college. Income is counted much more highly in the financial aid calculation than assets so hopefully she might still get some financial aid. But if not we are prepared to pay for all expenses from the 529 and any difference we could cash flow or take from taxable as well.

Due to the 10 years forgiveness and along with potential financial aid assistance, plus no state deduction, does it even make sense to do it?

It's worth it in my mind because you don't pay any state or federal tax on the gains, which were quite substantial in my case since I started the California 529 plan pretty much when my kids were born. The forgiveness/financial aid qualification does not enter into the equation for us since I would have saved for my kids education no matter what. The only difference is if it's held in a 529 or some other vehicle, the amount of assets in either case would have been the same.

If the choice was 529 vs. don't save at all (i.e. lower assets and hope for financial aid), then that's completely different.

It’s worth it. You don’t get deduction putting in but not paying tax on the gains is great.

We started with a target fund but were unhappy with the returns. We switched to 100% stocks. Worked out for us. Your mileage may vary.

The only annoyance is figuring out how to fill out Turbo tax at withdrawal time. (Vague memory follows). TT tries to get an education tax credit (for which we are not eligible). So it decreases the qualified education expenses by what the credit would be worth.

It’s very important to do withdrawals in the year you pay the college. Try to get that done by November so you have December to fix.

It’s worth it. You don’t get deduction putting in but not paying tax on the gains is great.

We started with a target fund but were unhappy with the returns. We switched to 100% stocks. Worked out for us. Your mileage may vary.

The only annoyance is figuring out how to fill out Turbo tax at withdrawal time. (Vague memory follows). TT tries to get an education tax credit (for which we are not eligible). So it decreases the qualified education expenses by what the credit would be worth.

It’s very important to do withdrawals in the year you pay the college. Try to get that done by November so you have December to fix.

Thanks, the 529 has bond or stock fund to invest just like the regular vanguard brokege account?

It’s worth it. You don’t get deduction putting in but not paying tax on the gains is great.

We started with a target fund but were unhappy with the returns. We switched to 100% stocks. Worked out for us. Your mileage may vary.

The only annoyance is figuring out how to fill out Turbo tax at withdrawal time. (Vague memory follows). TT tries to get an education tax credit (for which we are not eligible). So it decreases the qualified education expenses by what the credit would be worth.

It’s very important to do withdrawals in the year you pay the college. Try to get that done by November so you have December to fix.

Thanks, the 529 has bond or stock fund to invest just like the regular vanguard brokege account?

It has a low cost stock index fund and a bunch of target funds. It has a bond index fund but I haven’t personally used that. Website is scholarshare.com.